Question

Analysis of the Common-size statements—i.e., what changed and why. That is, describe the changes in these statements and analyze the cause of the changes.

Include: a) mix of assets,

b) split between current assets and fixed assets,

c) mix of debt,

d) split between current liabilities and LT liabilities, capital structure (i.e., debt and equity),

e) profitability at all levels,

f) changes in expenses, etc.

This section must include evidence of research indicating what events had substantive effects on Coke’s financial profile during the 10 year period. In other words, profitability may have increased due to introduction of new product lines, leverage may have increased due to the issuance of bonds, and assets may have increased due to acquisitions. These are offered as examples, and your research should indicate what occurred and how it affected Coke from a financial perspective.

Coca-Cola Common Size Balance Sheets for December 2006 and 2016 All amounts in Millions 2006 2016 Assets Current Assets Cash and Equivalents $2,440 $22,201 8% 25.4% Receivables $2,704 $3,856 9% 4.4% $1,641 5.5% $2,675 3.1% Inventory $1,656 $5,278 Other 5.5% 6.1% $8,441 $34,010 Total Current Assets 28% 39.0% Productive Assets $6,903 $10,635 Property, Plant, and Equipment (net) $6,903 $10,635 Net Productive Assets 23% 12.2% $14,619 $42,625 48.8% Other Assets 49% $21,522 $53,260 Total non-current assets 71.8% 61.0% $29,963 $87,270 Total Assets 100% 100% Liabilities And Shareholders' Equity Liabilities Current Liabilities Accounts Payable $5,622 $2,682 19% 3.1% $3,268 11% $16,025 Current Debt Due 18,4% $0 $7,825 Other 0% 9.0% $8,890 $26,532 Total Current Liabilities 30% 30.5% Long-Term Liabilities $1,314 $29,684 LT Debt 4% 34.0% $2,231 $3,753 Other LT Liabilities 7% 4.3% $608 $4,239 Deferred Income Taxes 2% 4.9% $4,153 $37,676 Total LT Liabilities 43.2% 13% $13,043 $64,208 Total Liabilities 43% 73.6% Shareholders' Equity $878 ($22,118) $1,760 Common Stock 3% 2.0% -74% ($47,988) -55.0% Treasury Stock Retained Earnings $33,468 $65,502 112% 75.1% ($1,291) $5,983 -5% ($11,205) Equity Adjustments -12.8% 20% $14,993 17.2% Capital Surplus Total Shareholders' Equity Total Equity + Liabilities $16,920 $29,963 $23,062 100% $87,270 26.5% 57% 100%

Answer 1

a) Proportion of current asset has increased in the Asset mix mostly due to substantial increase in cash and cash equivalent

b) net productive asset has not increased but other assets have increased substantially. However increase in cash and cash equivalent has caused the current asset to increased to 39% from 28%

c) Current liabilities have remained constant however the company seems to be increasing long term debt

d) Long term liability has increased and equity has dropped in comparison to 2006. Hence it seems that the company is funding expenditure through long term debt

e) Profitability has increased as retained earning has doubled and there is a increase in capital reserves

f) Expense has come down compared to earlier considering coke is funding through long term debt. There is increase in current assets mostly due the cash and equivalent. This show that there is huge demand of the company products and there seems to be negative working capital due to this.